Main menu

Downsizing Blog

The Wall Street Journal is reporting that Fannie Mae and Freddie Mac, which have already consumed $112 billion in taxpayer bailouts, may have additional losses if they can’t recoup claims from struggling private mortgage insurers.

The HUD Inspector General’s Office released an audit earlier this week on the department’s progress in making sure local public housing agencies aren’t subsidizing the deceased. According to the report, local “agencies made an estimated $15.2 million in payments on behalf of deceased tenants that they should have identified and corrected.”

Over the past decade, the Federal Housing Administration has been insuring riskier mortgages in an attempt to regain “market share” lost to private competitors during the housing boom. But after the housing bubble burst and private firms either went out of business or reduced their risk profile, the FHA continued to plow ahead insuring risky mortgages. This could all backfire on taxpayers.

The New York Timesreports on the internecine fighting among high-speed rail lobbyists. At stake is $8 billion in stimulus money that the Obama administration views as a down payment on a nationwide high-speed rail network. As the Times notes, “Nothing stirs passions for a massive public-works project like a wad of federal cash.”

The Pew Charity Trust’s Subsidyscope website just released a report on the Export-Import Bank, which is a government agency that helps finance U.S. exports through loans and loan guarantees. As it turns out, Boeing is hands down Ex-Im’s biggest beneficiary.

The Washington Post is full of so many stories about government failure these days, it’s hard to keep up.

Today, on page A19 we learn about a Small Business Administration subsidy program that has a 60-percent default rate. On the same page, we learn that the U.S. Postal Service will lose $7 billion this year.

Benjamin Franklin said: “In this world nothing can be said to be certain, except death and taxes.” I would add a third certainty: cost overruns at the Pentagon. The Government Accountability Office recently reported that the Pentagon’s space program is facing multi-billion dollar cost overruns and multi-year delays.

The U.S. Department of Energy recently awarded $2.4 billion in stimulus money to develop and manufacture electric vehicles. The ostensible purpose of the government’s effort is to set the nation on a path toward more environmentally friendly transportation. But as the USA Today notes, electric cars might not provide the environmental benefits that proponents cite:

I haven’t followed the controversies surrounding Valerie Jarrett, a senior advisor to President Obama. However, her tenure as the CEO of a company that received federal money to run a public housing project deserves further scrutiny.